Danish discount retailer Netto teams up with Sainsbury's in UK return

Nassos Stylianou is an Online Writer at City A.M. He can be contacted at nassos.stylianou@cityam.com. He is particularly passionate about: sport, European politics and startups

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Netto has teamed up with Sainsbury's in UK return (Source: Getty)

Danish international discount grocery retailer Netto is returning to the UK, teaming up with Sainsbury's as the supermarket chain attempts to take on rivals Aldi and Lidl.

This is an attempt by Sainsbury's to reposition itself, via Netto, to tackle the burgeoning discount store market that has grown rapidly in recent years and started to eat into the UK’s £170bn grocery industry.

The venture between the pair will see the opening of 15 Netto shops by the end of 2015, with the first opening in the north of England later this year, according to the Scandinavian retailer.

The deal, initially in trial form, will combine the experise that Netto's parent company Dansk Supermarked have in systems infrastructure and their knowledge of the low cost market with Sainsbury's UK grocery, product sourcing and property experience.

"This joint venture provides a great opportunity for us to gain exposure to the high growth discount market for the first time in partnership with Dansk Supermarked, whose expertise and values are a strong complement to our own," said Mike Coupe, CEO Designate of Sainsbury's.

Each partner’s initial investment will be £12.5m and given start-up costs, each partner expects to incur a post-tax loss in the region of £5-10m up to 31 March 2015.

"It’s great to be bringing a new twist to the rapidly-growing UK discount sector. We’ll offer market-leading value to customers with the freshness and innovation that customers rightly associate with Denmark," said Per Bank, Dansk Supermarked CEO.